SUSTAINABLE INDUSTRIAL DEVELOPMENT FOR SHARED PROSPERITY

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

UNIDO’s Programme for Country Partnership – An Overview

Disclaimer

This document has been prepared without formal United Nations editing. The opinions, designations and material presentations do not imply the expression of any opinion whatsoever on the part of UNIDO concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries. All photos and intellectual property are copyright property of UNIDO, unless otherwise stated. The publication language of this document is English.

November 2016

MOBILIZING PARTNERS AND RESOURCES FOR LARGER DEVELOPMENT IMPACT

CONTENTS

INTRODUCTIONInternational development context UNIDO and inclusive and sustainable industrial development The rationale for a new partnership model

THE PROGRAMME FOR COUNTRY PARTNERSHIPWhat is the PCP?UNIDO’s roleKey featuresPiloting the PCPThe Partnership Trust Fund

PILOT PROGRAMMES FOR COUNTRY PARTNERSHIPPCP for EthiopiaPCP for SenegalPCP for Peru

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INTRODUCTIONThis brochure provides an introduction to UNIDO’s innovative model for advancing inclusive and sustainable industrial development: the Programme for Country Partnership (PCP). Part I describes the context and rationale for the development of the new approach. Part II describes the key features of the PCP. Part III provides an overview of the three pilot PCPs − Ethiopia, Senegal and Peru − including the priority areas and cross-cutting interventions of the respective programmes.

International development context

In September 2015, Heads of State and Government agreed on the 2030 Agenda for Sustainable Development. This agenda includes 17 Sustainable Development Goals, or SDGs, which set out  quantitative objectives across the social, economic, and environmental dimensions of sustainable development − all to be achieved by 2030.

These new and universally applicable Goals are considerably more ambitious in scope than their predecessor, the Millennium Development Goals. Achieving the SDGs will require an unprecedented level of collaboration across all counties and stakeholders. It requires the pooling of resources from diverse actors through multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources.

SDG 17 states the need to “strengthen the means of implementation and revitalize the global partnership for sustainable development”, highlighting the central role of partnerships in fulfilling the 2030 Agenda. As such, new forms of collaboration are increasingly shaping between inter alia states, civil society, international organizations, financial institutions and the private sector, leveraging

resources from various actors to allow for more scalable and sustainable development results.

UNIDO and inclusive and sustainable industrial development

UNIDO’s vision to address today’s economic, social and environmental challenges is enshrined in the Lima Declaration, adopted by the Organization’s Member States in December 2013. The Lima Declaration provides UNIDO with a mandate to achieve inclusive and sustainable industrial development (ISID).

ISID is based on the recognition by Member States that poverty eradication “[…] can only be achieved through strong, inclusive, sustainable and resilient economic and industrial growth, and the effective integration of the economic, social and environmental dimensions of sustainable development”.

Inclusive and sustainable industrial development means that:

• Every country achieves a higher level of industrialization in their economies, and benefits from the globalization of markets for industrial goods and services.

• No one is left behind in benefiting from industrial growth, and prosperity is shared among women and men in all countries.

• Broader economic and social growth is supported within an environmentally sustainable framework.

• The unique knowledge and resources of all relevant development actors are combined to maximize the development impact of ISID.

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UNIDO’s mandate for ISID is anchored within the internationally agreed 2030 Agenda. Of the 17 SDGs that comprise this agenda, Goal 9: “build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation” is especially relevant to UNIDO’s work. It recognizes that the industrial sector can serve as a primary engine not only of job creation and economic growth, but also of technology transfer, investment flows and skills development.

In addition to Goal 9, UNIDO’s mandate for ISID aligns with many other SDGs, including those related to poverty eradication (SDG 1), job creation (SDG 8), access to clean and affordable energy (SDG 7) and gender equality (SDG 5), among others.

The rationale for a new partnership model

Partnerships are not only key to successfully tackling the global development challenges that lie ahead, but also essential to the achievement of UNIDO’s mandate. Achieving inclusive and sustainable industrial development requires a broader range of resources than any individual entity can provide.

ISID entails interventions ranging from skills development schemes aimed at generating employment, to policies aimed at facilitating the growth of domestic enterprises and foreign direct investment, to upgrading infrastructure such as roads and energy utilities, all the while ensuring that environmental concerns remain at the forefront of industrial development. Ultimately, achieving this comprehensive goal requires the pooling of resources and expertise from diverse actors. With this in mind, UNIDO set out to define a new partnership framework for the Organization. Following extensive consultations with stakeholders and potential counterparts, including during two ISID Forums in 2014, the process culminated in the development of a new service package for UNIDO Member States: the Programme for Country Partnership (PCP).

The objective of the new model is to mobilize external partners and additional resources in order to extend the impact of UNIDO’s technical cooperation and accelerate inclusive and sustainable industrial development in Member States. Uni

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The untapped manufacturing potential of the least developed countries suggests significant growth opportunities

Manufacturing is one of the principal engines of economic growth. However, inequalities in the value added in the manufacturing sector point to the steep challenges faced by the most disadvantaged countries, as well as their potential for growth. For example, in 2015, manufacturing value added (MVA) per capita was less than 100 US dollars a year in the least developed countries (LDCs) compared to 4,926 US dollars in developed regions. Significant invest-ment is needed in the LDCs to boost technological progress and economic growth, and to achieve the target of doubling industry’s share in the gross domestic product of these countries. Trends in MVA show steady increases in devel-oping regions and a slight decline in developed regions, which is similar to trends in manufacturing jobs. The poten-tial for growth in manufacturing employment is particularly high in the LDCs because large segments of the population continue to work in agricultural and traditional sectors.

Sustainable Development Goal 9 addresses three important aspects of sustainable development: infrastructure, industriali-zation and innovation. Infrastructure provides the basic physical facilities essential to business and society; industrialization drives economic growth and job creation, thereby reducing income inequality; and innovation expands the technological capabilities of industrial sectors and leads to the development of new skills.

Goal 9: Build resilient infrastructure, promote inclusive

and sustainable industrialization and foster innovation

Manufacturing value added per capita, 2005 and 2015 (constant 2010 US dollars)

2005 2015

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Least developed countries6298

Landlocked developing countries119149

Small island developing States1,068

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Developed regions4,710

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Developing regions552

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The following section describes what the Programme for Country Partnership (PCP) is and highlights the key features of the new programme, including UNIDO’s role.

What is the PCP?

The PCP is UNIDO’s innovative model for accelerating inclusive and sustainable industrial development in Member States. Aligned with the national development agenda and focused on sectors with high growth potential, the programme supports a country in achieving its industrial development goals.

The PCP rests on a multi-stakeholder partnership led by the host government. It builds synergies with ongoing government and partner interventions relevant to industrial development. The PCP is also designed to leverage additional investment in selected priority sectors. As such, it is a model that mobilizes partners and resources to achieve larger development impact.

For UNIDO, the PCP serves to operationalize the Organization’s mandate and SDG 9. At the same time, it is a model that can be used to implement the broader SDGs.

UNIDO’s role

UNIDO takes a leading role during the entire PCP cycle: from initiation and preliminary assessments, to consultations with different stakeholders and programme development, and throughout

implementation. The Organization provides guidance and drives PCP interventions jointly with the government, who maintains ultimate ownership of the programme to ensure sustainability. At the same time, UNIDO facilitates overall PCP coordination and provides an advisory function to the government on all industry-related issues.

UNIDO supports the government in developing a strategy for prioritizing and ultimately accelerating industrialization through the PCP. This includes identifying priority industrial sectors, namely those with a strong potential for job creation, increasing exports and attracting foreign direct investment.UNIDO conducts value chain assessments within these sectors and advises on which interventions are required to advance inclusive and sustainable industrial development. During these processes, UNIDO identifies and reaches out to essential partners, with a focus on leveraging large-scale public and private investment.

Additionally, a multidisciplinary UNIDO team provides technical assistance for the execution of the programme in line with the three pillars of ISID: promoting shared prosperity, advancing economic competitiveness and safeguarding the environment. This includes, among other interventions, skills training programmes, industrial energy efficiency projects, and conducting feasibility studies for the establishment of major industrial projects, such as industrial zones.

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THE PROGRAMME FOR COUNTRY PARTNERSHIP: MOBILIZING PARTNERS AND RESOURCES FOR LARGER DEVELOPMENT IMPACT

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The PCP leverages large-scale public and private investment for industry, infrastructure and innovation.

• AUNIDO multidisciplinary team provides technical assistance.

• UNIDO facilitates overall coordination.

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• TheGovernment provides leadership through a national coordination mechanism.

• ThePCPisalignedwiththenational industrialization strategy and targets prioritized industrial sectors.

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PROGRAMME FORCOUNTRY PARTNERSHIP

Key features

The PCP is not a static template, but a custom-built partnership formula with each beneficiary country maintaining ownership of the entire process. The PCP builds on UNIDO’s traditional technical assistance provision, but adds new features that make it especially relevant for current development challenges and achieving ISID.

The main new features of the PCP include: coordination under the leadership of the host government; selected priority sectors or areas; a multi-stakeholder partnership; and the mobilization of large-scale public and private finance.

1. Coordination under the leadership of the host government

The PCP is characterized by strong government ownership at the highest political level. This entails guidance and leadership of the programme, alignment with national industrial development goals, and a leading role in resource mobilization.

A national coordination mechanism is set up under the leadership of the government in order to effectively manage the partnership. It brings together all relevant ministries, including the Ministry of Finance, and development partners. It is responsible for overall PCP coordination, prioritizes projects and programmes, ensures synergies between funding and investment from different partners, and monitors progress.

2. Selected priority sectors or areas The PCP focuses on selected number of priority sectors or areas essential to the government’s industrial development agenda. Priority sectors are typically selected based on job creation potential, availability of raw materials, export potential and ability to attract investment. A prioritized area can be of a cross-cutting nature, such as the development of sustainable industrial zones. A focused approach enables UNIDO to concentrate its diverse, in-house expertise, and maximize impact in areas key to the country’s industrial development.

3. Multi-stakeholder partnership The PCP is a multi-stakeholder partnership from programme design to implementation. It links the industrial development efforts of the respective national government, United Nations agencies, development partners, financial institutions, the private sector, academia and civil society.

Each of these different actors has its own set of priorities, limitations and advantages that need to be utilized in a coherent manner to avoid duplication of activities, to capitalize on the strengths of each, and to result in overall greater impact. Once partners are united under the umbrella of the PCP, there is greater synergy and ease in leveraging larger investments for ISID.

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4. Mobilization of large-scale public and private investment

The PCP facilitates the mobilization and coordination of three streams of resources: public investment, private sector investment, and technical assistance.

The host government plays a lead role in the mobilization of resources for the implementation of the PCP. This is done in part through the direct allocation of its own resources and in part through loans, for example for industrial infrastructure development. Such public investment under the PCP helps to mobilize additional private finance.

The PCP supports the government in improving the overall business environment and in promoting specific investment opportunities to attract domestic as well as foreign direct investment. At the same time, UNIDO provides technical assistance designed specifically to unlock large-scale funding from development partners, such as development finance institutions and bilateral donors. Such support includes, among others, conducting feasibility studies to facilitate partners’ investments.

Piloting the PCP

In order to pilot the new model, UNIDO conducted high-level scoping missions to consult with relevant stakeholders in potential PCP countries. In mid-2014, Ethiopia and Senegal were selected as the first two pilots. Multidisciplinary technical teams were assembled who, in close collaboration with the respective governments and potential partners, formulated the PCP for each country. In December 2015, Peru became the third PCP pilot country. Over the next few years, the programme will be rolled-out progressively to other geographical regions.

Partnership Trust Fund

UNIDO has established an overarching Partnership Trust Fund to support the development and roll-out of the PCPs. Through voluntary contributions, the Trust Fund supports activities such as the development of an industrialization strategy, preparatory activities in selected pilot countries, overall PCP coordination, joint activities with PCP partners, bridging a funding gap where there is potential to trigger additional large-scale funding, and global forum activities aimed at promoting partnerships.

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Photo: Bringing key stakeholders together: The Prime Ministers of Ethiopia and Senegal and the Secretary-General of the United Nations hosted by the Director General of UNIDO at the Second ISID Forum, November 2014 .

PERU

SENEGAL

ETHIOPIA

PILOT PROGRAMMES FOR COUNTRY PARTNERSHIP: ETHIOPIA, SENEGAL AND PERU

The PCP for Ethiopia is rooted in the country’s national development strategy for the period 2015 to 2020, the Growth and Transformation Plan II (GTP II). The GTP II aims to bring about the structural transformation of the Ethiopian economy from one based on agriculture to one driven primarily by industries. The objective of the GTP II is for Ethiopia to become a middle-income country by 2025.

The PCP for Ethiopia is supporting the Government in implementing the GTP II and achieving its industrial development goals. The Government has identified the development of light-manufacturing and industrial zones as vehicles for accelerating industrialization, which are therefore integral parts of the PCP for Ethiopia. The three priority sectors of the PCP – agro-food processing, leather and leather products, and textiles and apparel – also lie at the heart of the GTP II.

National coordination mechanisms have been established under the leadership of the Government of Ethiopia, bringing together all relevant ministries and PCP partners. The two coordination bodies are a Joint Steering Committee chaired by the Ministry of Finance and Economic Cooperation, and a National Technical Task Force chaired by the Ministry of Industry.

Priority sectors The PCP for Ethiopia focuses on developing light-manufacturing, particularly in agro-food processing; textiles and apparel; and leather and leather products. These three sectors were chosen due to their prospects for job creation, strong linkages to the agricultural sector,

high export potential and capacities to attract private sector investment.

Agro-food processing

Agro-industries account for the largest share of manufactured goods in Ethiopia, with food and beverages constituting approximately 52 per cent. The improved investment climate alone, however, has not been sufficient to attract investors to the agro-processing sector in places where there is high economic potential. This is mainly due to the lack of proper infrastructure and the inadequate supply of raw materials.

In order to address some of these challenges, the PCP will support the establishment of four integrated agro-industrial parks (IAIPs), a priority initiative of the Government of Ethiopia. The IAIPs will focus on adding value to locally sourced agricultural products and will address constraints to private sector development. The parks will provide large- and medium-scale firms with access to infrastructure and utilities, as well as business services. At the same time, they will serve as a platform for catalyzing investment and job creation.

Rural transformation centres (RTCs) will also be set up around each IAIP. They will serve as aggregation points with a modern warehouse and market facilities, connecting the parks with the surrounding rural community.

UNIDO has finalized feasibilities studies for the establishment of four pilot IAIPs and their surrounding RTCs. The PCP is mobilizing large-scale public and private finance for the development of IAIP infrastructure.

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THE PROGRAMME FOR COUNTRY PARTNERSHIP FOR ETHIOPIA

Textiles and apparel

With an abundance of raw materials, low wages and low energy costs, the Ethiopian textiles and apparel sector has a comparative advantage over other countries. The sector comprises a number of state-owned and private enterprises covering all stages of the value chain. Their main activities include spinning, fabric weaving, dying, finishing and the production of ready-made garments. Ethiopia also has a flourishing cotton-based handloom industry with a large number of traditional weavers.

The sector offers substantial opportunities for access to regional and international markets, especially as foreign direct investment is increasing. A growing number of garment companies from Turkey, India, Italy and other countries are investing and registering in Ethiopia. Investments in the textiles and apparel sector exceeded USD 1.2 billion in the last five years and have created over 50,000 jobs.

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However, in order for the sector to achieve its full potential, production and supply chain inefficiencies along the cotton-to-textiles value chain need to be addressed. Raw material shortages are also one of the main challenges faced by the industry.

In response, the PCP for Ethiopia will help increase the supply of quality raw materials, upgrade workforce skills and build the capacity of support institutions along the value chain. The programme is also promoting investment opportunities in integrated textile mills.

Leather and leather products

The Ethiopian leather industry enjoys significant comparative advantages as the country has one of the world’s largest livestock populations. It includes 52 million cattle (first in Africa and sixth in the world), 27 million sheep (third in Africa and tenth in the world) and 23 million goats (third in Africa and eighth in the world).

The Government introduced a tax on exports of pickle and wet-blue leather, which led to a significant structural change in the leather industry by encouraging manufacturers to move from primary processing to the production of crust and finished leather. The Ministry of Industry is targeting an increase in exports of leather and leather products, from USD 130 million in 2015 to USD 1.4 billion by 2020, which is expected to create 336,000 new jobs.

The PCP is supporting the Government of Ethiopia in the establishment of a leather industry cluster on the basis of an existing concentration of tanneries in the town of Modjo.

UNIDO finalized a feasibility study on the establishment of the “Modjo Leather City” and is supporting the Government in mobilizing the necessary resources. The PCP will also help set up four footwear and leather goods clusters, and strengthen the fashion design and training capabilities of the Leather Industry Development Institute.

Cross-cutting componentsIn order to promote investment in the three priority sectors, UNIDO and the Government of Ethiopia are undertaking several activities in collaboration with PCP partners. This includes reviewing the related policy framework, preparing feasibility studies, mobilizing resources for infrastructure development, preparing specific investment projects and organizing international investment events. The PCP also integrates complementary cross-cutting interventions according to government-defined priorities.

Trade facilitation

In order to optimize the development of light industries in Ethiopia, inefficiencies in trade facilitation also need to be addressed. These include high freight-handling costs, high costs of financial services and long delays in the authorization of letters of credit, as well as complex customs procedures and high customs fees.

The PCP will help national institutions to develop and apply quality standards and certification schemes in conformity with international market requirements, in particular for industrial zones. UNIDO will also work with its PCP partners to set up a trade knowledge centre to provide information on import-export procedures, tariffs, and best practices related to relevant World Trade Organization Agreements. This will help reduce information asymmetries between public institutions, businesses and investors.

An analysis of the current institutional responsibilities and regulatory powers will be conducted to identify redundancies and improve effectiveness of procedures in public institutions. Public officials will also benefit from training courses on trade facilitation.

Environment and energy

Industries are major consumers of energy and require an uninterrupted supply. However, for industries located in isolated areas, energy access is constrained by limited infrastructure and an unreliable power supply. With this in view, the PCP will promote the use of locally available renewable energy resources, such as bio-waste or small hydropower stations, to power industrial park operations. A systematic and integrated approach to energy efficiency will lead to substantial energy savings, thereby increasing the productivity and competitiveness of industries.

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While Ethiopia ranks as Africa’s largest meat producer, an estimated 300,000 tons of animal by-products are dumped annually in open fields. Apart from the loss of valuable economic resources, waste creates an environmental problem. The PCP is therefore assisting the Government to develop industrial complexes with higher environmental standards and improved waste management systems. UNIDO, together with its PCP partners, will help set up a rendering industry to generate semi-products for the downstream manufacturing of a variety of industrial and food products, initially targeting seven export-oriented slaughterhouses.

Institutional capacity-building

Strong national institutions are essential for Ethiopia to achieve its national development goals and capitalize on the large investment flows coming into the country. The Government has recently established a number of new institutions to support the industrialization process, in addition to upgrading existing ones. However, challenges remain in terms of coordination between the various institutions, as well as limited human resource capacity for addressing strategic and structural issues within the institutions themselves.

The PCP will work with the Government of Ethiopia to strengthen the capacity of the Ministry of Industry to generate industrial intelligence, in particular for agro-industries. It will also support the establishment of an “industrial observatory” to centralize all industry-related data, alongside an effective monitoring and evaluation system. The PCP will also help the Government to institutionalize South-South and triangular industrial cooperation.

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The PCP for Senegal is being implemented within the framework of the Plan Senegal Emergent (PSE), the country’s national development strategy. The overall objective of the PSE is to transform Senegal into “an emerging country by 2035 with social solidarity and a state of law”.

The PCP for Senegal supports the implementation of the industrial component of the PSE, with a focus on selected priority industrial projects. To this end, the PCP is supporting the Government in designing a national industrial policy and identifying sectors with high potential for economic growth.

The Government of Senegal has identified several key industrial projects to spearhead the structural transformation of the economy; these form the basis of the PCP. One such project is the establishment of agro-poles for high-potential value chains. The development of integrated industrial parks and special economic zones is another pillar of the PSE that is addressed through the PCP.

A national coordination mechanism has been established under the leadership of the Government of Senegal, bringing together relevant ministries and PCP partners. This coordination body − the National Steering Committee − is chaired by the Prime Minister’s Office. A Partner and Donor Working Group will also be established under the auspices of the Ministry of Economy, Finance and Planning.

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Priority areasThe PCP for Senegal focuses on three main areas: i) industrial policy development; ii) the establishment of competitive and integrated agro-poles; and iii) the operationalization of a new generation of industrial parks.

Industrial policy

The Plan Senegal Emergent is the reference document orienting economic and social policy in Senegal and provides strategic guidance for industrial projects. However, in order to achieve the objectives of the PSE, Senegal needs an effective national industrial policy and action plan. The PCP is therefore supporting the Government in designing an effective strategy to accelerate industrialization, including identifying priority sectors.  

The PCP will support the establishment of a strategic unit within the Ministry of Industry, dedicated to the development of a strategy and action plan for the implementation of Senegal’s industrial policy. Training workshops will be delivered to government officials on conducting industrial diagnosis, selecting priority industrial sectors, and assessing the social and environmental impacts of industrialization.

To this end, UNIDO and the National School of Development of Peking University prepared a report on growth identification and facilitation for industrial upgrading and diversification (GIFIUD) within the

THE PROGRAMME FOR COUNTRY PARTNERSHIP FOR SENEGAL

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framework of the PCP. The GIFIUD report presents an analysis of Senegal’s potential key sectors and provides recommendations for achieving “quick wins” based on international market opportunities.

Agro-poles

Agro-industries have the potential to contribute significantly to economic development and poverty reduction. They can generate employment for rural populations not only in farming, but also in activities such as handling, packaging, processing, transport and marketing of agro-food products. The Government of Senegal has therefore prioritized the establishment of agro-poles within its national development strategy. Agro-poles will serve as geographical clusters of infrastructure and support services for small and medium-sized enterprises (SMEs) operating in the agro-industrial sector.

The PCP has helped the Government to delineate the concept and scope of an agro-pole. This includes the identification of its components, location and targeted agro-industrial value chains. The PCP is supporting the establishment of three agro-poles for high-potential value chains: fruits and vegetables; aquaculture and fisheries; and livestock and other agro-value chains.

The agro-poles will provide the appropriate infrastructure, technologies and services to strengthen agro-industrial value chains. Such support services will include training programmes to promote commercial farming, value addition and modern marketing techniques.

In addition, the PCP will help define the regulatory, financial and management framework of the agro-poles, as well as the design of on-site infrastructure. UNIDO also

serves an advisory function to the Government and the private sector on investment-related decisions. As such, large-scale public and private investments, including from development finance institutions, are being mobilized for the establishment of the agro-poles.

Integrated industrial parks

The agro-food processing, textile, and mineral sectors have high potential in terms of industrial capacity, value addition and job creation. However, the small size of production units and economic actors, high input costs, and limited access to finance are major impediments to the country’s industrialization. By providing the required infrastructure and support services, industrial parks can address some of these challenges. By providing policy advice and technical support, the PCP for Senegal is supporting the development of a new generation of integrated industrial parks.

The PCP has been instrumental in the operationalization of the first phase of Diamniadio, Senegal’s first integrated industrial park. The PCP has developed a business model for the park’s management and an incentive package to attract public and private investment for infrastructure development.

UNIDO will support the Government of Senegal in mobilizing funds from international investors and financial institutions for the second phase of Diamniadio. Once fully operationalized, the integrated industrial park will serve as one-stop-shop, providing maintenance, logistics and security services for companies.

The PCP will also conduct feasibility studies and select sites for the development of additional integrated industrial parks, and elaborate business plans for their implementation.

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Cross-cutting componentsThe PCP for Senegal also integrates complementary cross-cutting interventions according to government-defined priorities.

Private sector development

The PCP integrates technical assistance interventions that foster private sector growth, especially for SMEs. These interventions focus on clustering, sub-contracting and value chain development to accompany the development of industrial parks and agro-poles. The ultimate objective is to increase the productivity, market access, and research and development capacities of SMEs, with a focus on high value added sectors, such as agro-industry, tourism, fisheries and aquaculture.

Investment promotion

The PCP will develop a survey to collect qualitative and quantitative data on the impact of investors in Senegal. The data collected will be integrated in the Investment Monitoring Platform (IMP), accessible to private and public institutions across the country. The IMP will gather comprehensive information not only on how investors respond to the Senegalese business environment, but also on how they impact employment, skills development and technology diffusion. The results of the survey will help strengthen the institutional capacities of relevant stakeholders and promote investment for ISID.

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Environment

In order to increase sustainable production and industrial resource efficiency within the industrial parks and agro-poles, the PCP will help establish eco-industrial parks, support the Sustainable Cities Programme in Senegal and promote the “greening” of value chains. These interventions are aligned with UNIDO’s Green Industry Initiative and will focus on pollution prevention, pollution abatement and resource management.

Energy

For most industrial parks and agro-poles in Senegal, energy access is constrained by limited infrastructure services and an unreliable power supply. It is therefore necessary to harness locally available renewable energy resources, such as production waste and solar energy, to power their operations. The PCP will support the integration of renewable energy and energy efficient technologies in industrial parks and agro-poles. It will also strengthen public and private sector capacities to provide energy efficiency services, and improve the legal and regulatory framework for energy-related investments.

Trade facilitation

In order to orientate trade facilitation services towards PSE targets and priorities, quality-support services will be provided within the agro-poles and industrial parks to ensure compliance with international food safety and quality requirements. The national quality infrastructure will be strengthened by improving the policy framework for food safety and hygiene, and by upgrading institutions involved in standards and metrology.

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Innovation, science and technology for industry

This PCP component aims to increase the productivity and competitiveness of the industrial sector through innovation. Two comprehensive surveys will be conducted: one on the Senegal National System of Innovation and the other on the innovation capabilities of firms across the country. The surveys will help develop tailored capacity-building and upgrading programmes aimed at strengthening the innovative capacities of institutional actors and firms. The PCP will also create and embed the surveys in a National Observatory on Innovation and Productivity to improve the evaluation, monitoring and management of the national innovation framework.

South-South and triangular industrial cooperation

The PCP is helping the Government of Senegal to institutionalize South-South and triangular industrial cooperation (SSTIC), in an effort to complement traditional “North-South” cooperation. Interventions will address low levels of investment, trade, technology and knowledge flows between Senegal and southern countries. Improved SSTIC will contribute to an overall increase in trade of value added products, increased and improved manufacturing, and lower production costs for southern manufacturing companies active in the country.

Over the past decade, Peru has been one of the fastest-growing economies in the Latin America and Caribbean region and classifies as an upper-middle-income economy by the World Bank. Its steady growth can largely be attributed to sound macroeconomic policies and economic openness, resulting in renewed investor confidence and improved infrastructure. The PCP for Peru aims to drive modern, competitive and inclusive industrialization, in line with the country’s national development strategy and goal of acquiring membership in the Organisation for Economic Co-operation and Development (OECD). The programme will support Peru’s continuing socio-economic progress, with a focus on promoting national quality infrastructure and innovation systems, and work on boosting the country’s competitiveness, addressing regional inequalities and reducing informal employment. As the newest of the three PCPs, the programme is in its early stages of development. UNIDO is working with the Ministry of Production and other national and international development partners to initiate technical activities within the selected priority areas of the programme, and mobilize funds and investment for its implementation. National coordination mechanisms have been established under the leadership of the Government of Peru, bringing together all relevant ministries and PCP partners. The two coordination bodies are a National Steering Committee

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under the leadership of the Ministry of Production, and a Partner and Donor Working Group under the auspices of the Ministry of Economy and Finance, Ministry of Production, and Ministry of Foreign Affairs.

Priority areasThe PCP for Peru focuses on four key areas: i) quality and innovation; ii) value chain, enterprise and cluster development; iii) sustainable industrial parks; and iv) industrial resource and energy efficiency, and renewable energy.

Quality and innovation

Peru’s quality and innovation system has advanced considerably in recent years. This is partially due to the development of a national quality policy and the establishment of the National Institute for Quality (INACAL) in 2015, complemented by significant public investment in innovation grants. Yet, there is a need to strengthen the newly created institutions and balance the supply and demand of quality and innovation services in an inclusive and sustainable manner. As such, the PCP for Peru places emphasis on building national institutional capacity and boosting demand for quality and innovation services. The PCP will help foster a culture of quality in order to increase productivity, innovation, safety and security in the industrial sector.

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As part of the initial assessment, INACAL and UNIDO jointly hosted a quality workshop. The latter provided critical inputs for elaborating a road map to develop a national quality culture in Peru.

The PCP will also provide technical support to the network of Innovation and Technology Centres (ITCs) in the country. These centres are expected to facilitate linkages and market access for small and medium-sized enterprises (SMEs) and expand their service portfolios. To identify and map the key services of these centres and understand their respective role, UNIDO conducted an independent assessment of three ITCs. The results of this assessment were compiled in a report and discussed with key actors in the innovation system in an open forum. Building on the report’s findings and the inputs from key innovation institutions, the PCP is developing an integrated inclusive and sustainable ITC model.

Value chain and enterprise development

In order to strengthen clusters and value chains, the PCP will focus on building capacities in and transferring international technologies to sector-specific institutions. The programme will also work on increasing production and processing capacity to foster competitive and high quality products. This includes supporting the creation of clusters, promoting new product designs and joint marketing techniques aimed at high-value markets, inside and outside Peru. Within the PCP framework, the Government has identified the aquaculture sector as a priority area, due to its high export potential and capacity to attract private

sector investment. Peru has a strong fishing industry; however, fish farming accounts for only 2 per cent of total fish exports and aquaculture development is still incipient. The sector offers substantial opportunities for access to international markets with a wide variety of products, including shrimp, fan shell or sea scallop, trout, tilapia and several Amazonian fish. Nonetheless, substantial challenges need to be addressed with regards to feed and fish ponds in order to expand the sector and ensure a uniform level of quality. Fragmented channels of production, distribution and sales also create challenges in terms of storage facilities and meeting demand. The PCP will work to improve coordination and cooperation in the fish market chain to increase opportunities and facilitate production for suppliers. The PCP also will support the organization of round tables and platforms specific to each value chain that bring together producers, potential investors, and knowledge and technology providers. Activities related to aquaculture will also support the development of business models for a number of bio-hydrological resources to promote new products in high value markets.

Sustainable industrial parks

Industrial zones act as a catalyst for private investment, but also risk aggregating negative social and environmental impacts from industrial activities. The PCP therefore aims to boost the productive capacity of industrial parks, while ensuring the economic, social and environmental sustainability of such areas. The PCP will advise on policies and regulatory mechanisms for sustainable industrial park planning

and management, and promote low-carbon and clean technologies and practices, energy efficiency, sound chemicals management, and renewable energy. UNIDO’s dual approach will focus on the development of new industrial parks on the one hand, and the transformation of existing industrial zones on the other. This involves integrating best available techniques and technologies in the construction, operation and management of industrial parks. The first such initiative within the PCP framework involves a sustainability review of the master plan for the establishment of an industrial park in the district of Ancón and the development of a project aimed at transforming the industrial area of Callao. For the latter, a grant has been secured from the Global Environment Facility to design a sustainable industrial zone development project worth an estimated USD 41 million.

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Resource and energy efficiency and renewable energy

Water pollution, soil degradation and air pollution are the principal environmental problems of Peru. In its Environmental Performance Review of Peru (2016), the OECD estimated the costs of environmental damage at some 4 per cent of gross domestic product. Around 70 per cent of those costs are associated with health damages resulting from waterborne diseases, atmospheric pollution in cities, exposure to lead, and contamination in the home. A key objective of the PCP is therefore to ensure that the industrialization models developed within the framework of the programme deliver shared prosperity, while safeguarding the environment at the same time.

To reduce the negative impacts of industry on the environment and human health, the PCP will strive to promote the efficient management of natural resources (water, material waste, etc.) and the use of environmentally sound technologies. The PCP will also support the adoption of renewable energy for industrial applications throughout sector value chains and will promote voluntary policies on energy efficiency, such as sustainable energy management systems. Finally, the PCP will bring together different government agencies and programmes to improve the coordination and control of activities that impact the environment, among others, the management of industrial chemicals.

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Cross-cutting componentsThe PCP for Peru also integrates complementary cross-cutting interventions according to government-defined priorities.

Institutional capacity-building

To achieve its national development goals and capitalize on the large investment flows coming into the country, Peru needs strong national institutions. Those established by the Government in recent years still face various challenges, including limited coordination with other institutions.In order to address some of these challenges, the PCP will build the capacity of national institutions to generate industrial intelligence and improve cooperation mechanisms among themselves and other national partners.

Gender and women empowermentAccording to the OECD’s Social Institutions and Gender Index, Peru holds a low gender discrimination rating. Nonetheless, women still face higher levels of poverty and unemployment than their male counterparts. Hence, it is essential for value chain and enterprise development initiatives to reflect the specific needs of women entrepreneurs and to include a gender aspect in monitoring and evaluation.The PCP will integrate gender into all objectives and outputs by following a two-pronged approach: 1) mainstreaming gender into all outputs; and 2) designing activities specifically aimed at addressing the identified inequalities.

Integrating SMEs into sustainable industrial parks and value chains

The PCP will support the integration of SMEs into larger value chains to increase their access to global markets and the industry knowledge of bigger firms. In this regard, the programme will focus on upgrading technical and administrative knowledge, fostering entrepreneurial spirit and helping businesses to increasing their profitability. This, in turn, will enhance SME competitiveness, create more jobs, and promote inclusive growth.

For more information, please contact:

Ciyong ZOU

Director, Department of Partnerships and Results Monitoring

Email: C.Zou@unido.org

For more information on the Programmes for Country Partnership, please visit:

https://isid.unido.org/index.html

OPERATION PLATFORM

INCLUSIVE AND SUSTAINABLEINDUSTRIAL DEVELOPMENT

Vienna International Centre, P.O. Box 300, 1400 Vienna, AustriaTelephone: (+43-1) 26026-0, Fax: (+43-1) 26926-69E-mail: unido@unido.org, Internet: www.unido.org